Planters want increase in daily tea plucking

[stocks hunterTop contributor]

Sri Lanka has the highest unit production cost for tea which could be reduced by seven percent by increasing the daily plucking average by a mere two kilograms, the Planters’ Association of Ceylon has said.According to the association, the unit cost of production for tea in Sri Lanka is Rs.460 per kilogram. The Planters’ Association estimates that a 2kg increase in the daily plucking average of tea of each worker can bring down unit cost of production by Rs.30 or 6.5%. “Such a development can boost the Regional Plantation Companies’ (RPCs) total revenue and mitigate the unsustainably high costs they are grappling with at present,” it said.

“Productivity improvements that increase the viability and sustainability of the estates, which provide livelihoods and employment for the workers would thus be a win-win situation, enabling workers themselves to reap substantial dividends,” the Association emphasizes. It said that productivity improvements also served a dire need, especially following the unprecedented fall in the global rubber prices to record lows below even the cost of production, resulting in tea – which too is facing turmoil in major export markets – being the only major source of income for most plantation companies.

The association further stated that while Ceylon Tea commands a premium at USD 3.6 a kilogram (USD 1.4 more than tea from Kenya and USD 1.5 more than tea from India) (according to Tea Market Report – June 2014) this is far more than negated by the substantially higher cost of labor and lower productivity resulting in a loss of approximately USD 0.4 per kilogram. At approximately USD 5.3, the daily wage of a Sri Lankan plucker is almost double that of a Kenyan plucker (USD 2.6) and more than double that of a plucker from South India (USD 2.1).

“We readily acknowledge that it is unrealistic to expect the plucking average of a Sri Lankan worker to equal that of a Kenyan worker because of many inherent factors prevailing in the local tea sector and neither is that the request of the Regional Plantation Companies,” Planters’ Association Chairman, Roshan Rajadurai explained. “What we request for is an extremely reasonable incremental increase of at least 2kg in the daily plucking average per worker, which is highly feasible but would nevertheless go a long way in assisting the companies to break even.”

“There is ample evidence to prove that workers can actually pluck far more than 2kg extra, if they really set their minds to do it,” he pointed out. “They must realize that any improvement in productivity will cushion the impact of the very high cost of production in Sri Lanka and eventually will help to sustain the tea industry, through cost reduction and improved competitiveness in the global marketplace. If the industry collapses, it will be the workers who will face the brunt of such a disaster. Already, we have heard reports that some rubber smallholders have stopped tapping rubber because it is unviable and they have alternate sources of employment. However, this will not be the case for the approximately one million plantation community resident in the plantations, who are enjoying all the benefits provided since they’re employed in the estates.”

“Especially following the substantial decline in rubber prices, the workers and the unions are at a crucial juncture and can decide to cooperate with the plantation companies to benefit mutually and put the industry on a sounder footing or can decide not to cooperate, which will at some point inevitably lead to the local plantation sector becoming financially unviable,” he said further.The request by the Planters’ Association comes in the backdrop of volatility in the prime markets for Ceylon Tea – the Middle East, Russia and Ukraine – contributing 70% of total value and a massive crash in rubber prices to one of the lowest levels in recent history.

www.nation.lk

[කිත්සිරි ද සිල්වාTop contributor]

Cut down some of the extravagance expenses of Plantation Managers and that too would help the bring the production cost down.
Aren't they?
Unions and Managers have to put their best foot forward, thinking the national interest first.